However, it turns out that even after the courts award decrees, banks find it difficult to get hold of the assets. According to a report in this newspaper, banks are now employing private agents (a synonym for strong arm tactics) to expedite recovery. This is being done in cases where the recovery has not been effected even three years after obtaining a decree. Fair enough. But this will apply to only small borrowers, mainly in the urban centres. In the rural interior, banks (or their private agents) will have to contend with the political power of panchayats and local bodies. So, the proportion of recoveries to banks' claims will be small. With or without decrees, banks have to think of writing-off NPAs as bad debt. But the bigger issue is corporate NPAs. Corporates are clever at using the law to keep banks off their backs. The bad cases go before BIFR, after the controlling interests have siphoned out funds. And where urban land is the only worthwhile recoverable asset, banks have to keep on the right sideof the concerned state governments.

Banks will not be able to get rid of their NPAs in a hurry. The problem is not just legal delays, but political skulduggery. Banks have also to cope with meddle-some directors (small-time fixers) appointed on their boards by the central government. (Why are nominee directors not barred from initiating loan proposals?). The best the banks can do is to ensure that new lendings are based on sound banking judgement, backed by close follow up of end-use of funds. They must give up their over-reliance on legal documentation to cover risk.